London pre-open: Stocks seen flat as investors digest Fed minutes

London stocks looked set for a muted open on Thursday as investors digested the latest Federal Reserve minutes and looked ahead to UK services data and some key US jobs figures.

The FTSE 100 was expected to open unchanged at 7,190.

CMC Markets’ Michael Hewson said: “Last night’s Fed minutes reinforced US policymaker expectations that we could well see multiple rate rises this year after last month’s rate rise, though officials remained cautious given the lack of clarity on the type of fiscal expansion that might be forthcoming in the coming months.”

Minutes from the meeting released on Wednesday showed that several committee members believed the current policy path of gradual rate increases was not likely to be appropriate due to the possibility that Trump and a Republican-controlled Congress will push through policies to stimulate the economy further, such as tax cuts, infrastructure spending and regulatory loosening.

“Fed officials pointed to a number of risks that, if realized, might call for a different path of policy than the currently expected,” the minutes said.

Almost all of the rate setters said the risks of growth overtaking the FOMC's forecasts had grown because of the possibility of the Trump stimulus plans, while the key theme was the even greater-than-usual degree of uncertainty over the outlook for growth, inflation, and interest rates.

On the data front, UK services PMI is at 0930 GMT, while in the US, the focus will be on the ADP employment report at 1315 GMT ahead of Friday’s all-important nonfarm payrolls. US initial jobless claims are at 1330 GMT.

On the UK data, Hewson said: “We’ve already seen fairly robust manufacturing and construction numbers this week and a decent number in the services sector will raise expectations for a strong end to a year that six months ago had a lot of people marking down their economic forecasts aggressively.

“Having seen a strong November number of 55.2, expectations are for a slight slowdown in December, but nothing too disastrous with 54.8 being the consensus view, reinforcing an expectation that we could well see a Q4 expansion close to Q3’s 0.6%.”

In corporate news, housebuilder Persimmon's private sales rate tailed off towards the end of the year, but the value of its forward sales has jumped as it enters 2017.

The company said its revenues for calendar 2016 of £3.14bn were 8% ahead of the previous year, with average selling prices climbing 4% though the rate of annual sales growth for the second half slowed to 15% from the 19% announced in early November.

HICL Infrastructure Company has bought stakes in two Dutch public–private partnership projects from Ballast Nedam, a construction and engineering firm, for a combined €21.3m.

The FTSE 250 company bought a 20% stake in the A9 Gaasperdammerweg road project and a 25% interest in the Zaanstad penitentiary project in the Netherlands.

Tullow Oil announced that its chief financial officer Ian Springett was taking an extended leave of absence in order to undergo treatment for a medical condition. The firm said Les Wood, vice president finance and commercial, had been appointed interim CFO.